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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Thermo Fisher Scientific Inc was -0.55. The lowest was -2.98. And the median was -2.47.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Thermo Fisher Scientific Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0641||+||0.528 * 1.0096||+||0.404 * 0.9743||+||0.892 * 1.0695||+||0.115 * 1.0446|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9837||+||4.679 * -0.0239||-||0.327 * 1.1882|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $2,895 Mil.|
Revenue was 4490.9 + 4535.2 + 4294.8 + 4652.5 = $17,973 Mil.
Gross Profit was 2053.9 + 2078.5 + 1957.9 + 2108.3 = $8,199 Mil.
Total Current Assets was $8,204 Mil.
Total Assets was $48,011 Mil.
Property, Plant and Equipment(Net PPE) was $2,599 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,709 Mil.
Selling, General & Admin. Expense(SGA) was $4,901 Mil.
Total Current Liabilities was $5,260 Mil.
Long-Term Debt was $16,940 Mil.
Net Income was 473.5 + 516.6 + 402.2 + 602.6 = $1,995 Mil.
Non Operating Income was -10.3 + -10.9 + 0.5 + -13.2 = $-34 Mil.
Cash Flow from Operations was 771.8 + 889.5 + 289.1 + 1228.1 = $3,179 Mil.
|Accounts Receivable was $2,544 Mil.
Revenue was 4123.2 + 4270.9 + 3918.8 + 4492.8 = $16,806 Mil.
Gross Profit was 1883.3 + 1941.8 + 1822.5 + 2091.9 = $7,740 Mil.
Total Current Assets was $6,026 Mil.
Total Assets was $41,147 Mil.
Property, Plant and Equipment(Net PPE) was $2,392 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,692 Mil.
Selling, General & Admin. Expense(SGA) was $4,658 Mil.
Total Current Liabilities was $5,735 Mil.
Long-Term Debt was $10,278 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2895.1 / 17973.4)||/||(2543.9 / 16805.7)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(7739.5 / 16805.7)||/||(8198.6 / 17973.4)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (8204.4 + 2599.3) / 48010.7)||/||(1 - (6025.9 + 2392.2) / 41147.1)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(1692.4 / (1692.4 + 2392.2))||/||(1708.7 / (1708.7 + 2599.3))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(4901 / 17973.4)||/||(4658.3 / 16805.7)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((16940.4 + 5259.9) / 48010.7)||/||((10277.9 + 5735.1) / 41147.1)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1994.9 - -33.9||-||3178.5)||/||48010.7|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Thermo Fisher Scientific Inc has a M-score of -2.53 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Thermo Fisher Scientific Inc Annual Data
Thermo Fisher Scientific Inc Quarterly Data